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Google launches trial of tap-to-pay phone system

NEW YORK (AP) - Google Inc. launched its bid to dominate a world
where the smartphone has replaced the wallet as the container for
credit cards, coupons and receipts.

It's a vision shared by others. The Internet search and
advertising company faces tough competition from cellphone
companies and Visa, which all want to play a central role in tying
together phones, retailers and banks into a new payment system.

Google said Thursday that it's launching a trial of its payment
system in San Francisco and New York in cooperation with MasterCard
and Citibank. It is opening it up to consumers in the summer. It
then plans to expand across the country.

There has been talk of smart payment systems for years. Google
faces the same hurdles that have stifled previous trials.

The new
Google Wallet will initially work on only one smartphone, the
Google Nexus S 4G carried by Sprint Nextel Corp. It will connect
only to MasterCard PayPass terminals. There are more than 135,000
of those in U.S. stores and restaurants, but that's only a small
fraction of the total number.

Google calls it a "single-tap" solution, meaning shoppers
should be able to pay with a single tap of their phone on a payment
terminal, or a swipe past it. But in a demonstration at Thursday's
New York event, a Google executive had to tap twice, then sign on
the screen of the terminal provided by retail partner American
Eagle Outfitters Inc. to get a purchase through.

Osama Bedier, Google's vice president of payments, said it was
up to the retailer to decide if the shopper has to sign on the
screen. The mobile payments system is more secure than credit and
debit cards with magnetic stripes, but Google apparently faces a
challenge in convincing retailers and perhaps also consumers of
that.

The Wallet will initially work with a MasterCard from Citigroup
Inc. and with a prepaid debit card issued by Google.

Partner Sprint is the country's third-largest cellphone company.
The other three of the four national carriers have formed their own
consortium, called ISIS, to create a wallet that will compete with
Google's. Visa Inc. has also announced plans for its own wallet.